What is creditable coverage?

Let’s focus on what creditable means for Medicare beneficiaries. Here are three situations that can apply.

• Creditable drug coverage and Part D, prescription drug plan: This drug coverage is considered at least as good as that of the standard Medicare prescription drug plan. This means the drug plan will pay at least as much as the standard Medicare plan. Those who have creditable drug coverage can delay purchasing a Medicare Part D prescription drug plan until that coverage ends without facing a Part D Late Enrollment Penalty.
• Creditable health coverage and Part B, medical insurance: An employer’s group health plan related to the current employment of the beneficiary or spouse is considered creditable for Part B, medical insurance. Those covered by a group health plan (sponsored by a company with 20 or more employees) do not have to enroll in Part B while that coverage is in effect. When that coverage is ending, there are special enrollment periods for Part B and other types of coverage. Any other coverage, such as a group plan sponsored by a company with fewer than 20 employees, retiree, union, veteran, or COBRA, is not considered creditable for Medicare purposes.These plans will be secondary to Medicare. Those with these types of coverage must enroll in Medicare Parts A and B during the Initial Enrollment Period. 
• Creditable health coverage and a Medigap policy: A company selling Medicare supplement insurance can delay the effective date of coverage for a pre-existing condition. If an individual had at least six months of creditable coverage (without a break of more than 63 days) prior to applying for a Medigap policy, the company must shorten or eliminate the waiting period. Most health insurance companies will meet Medicare’s criteria. 

If you have any questions, talk to a plan representative.